Saturday, 2 April 2011

Sharing the Proceeds of Mining, 5th Edition

It appears there's some movement to resolve one of the long standing issues from the Mwanawasa mining reforms. Regular readers will recall that among the 2008 provisions was that some revenue from the 'mineral royalty' [precise wording there] was to be shared with local people. Section 136 of the Mines and Mineral Development Act 2008 states "The Minister responsible for Finance shall, in consultation with the Minister [responsible for Mines], implement a mineral royalty sharing scheme for distributing royalty revenues". There’s no provision within the legislation on what this mechanism should be. Equally there are no penalties to government for failing to implement a revenue sharing mechanism. Well after much concerted pressure led by Hon Musenge and Hon Katema, it appears there's movement, according to Times of Zambia:

The Government is working out measures which will ensure money in mineral royalties collected from mine companies is used for development projects in the respective communities the firms operate in. Secretary to the Treasurer Likolo Ndalamei said the Ministry of Finance and National Planning is formulating a system to ensure that the collected revenue from mineral royalties directly benefited the communities.....

Responding to a query from Nkana Member of Parliament (MP) Musenge Mwenya (PF) on when the mineral royalties would start trickling down to the communities, Mr Ndalamei said the process had already started and would soon be implemented. "We have started the process, the Finance Minister (Situmbeko Musokotwane) has already issued a directive that the money benefits the communities and we are just looking at modalities to ensure that there is no abuse of the money," he said.

Mineral royalties, taxed at three per cent, are meant to have 20 per cent of the money collected used directly at community level with the other 20 per cent going to the local council while the remaining 60 per cent is for the central Government. He said the Government would ensure that the money was used for the intended purposes. "What we are trying to avoid here is a case where a local council would use the money to pay for salaries or a chief who receives the money on issues that are not for the community. We are trying to make it water-tight to protect the communities," he said

If this is true, it is a great step forward indeed. An exciting one if might add. We of course must see the detail, but if the numbers are correct then it is a great cause for celebration. This is something we have pushed for the last four years - see the post A Human Approach to the "Mining Debate". One of the benefits of being "antique" in the blogging world is that you get to see some of the things you have argued for being realised! Which is satisfying. I am hoping to return to that framework in due course with a lengthier post on "framing the mining debate" going forward.

1 comment:

The principal task is for government to provide the necessary policy and legislative framework making customary common property rights unassailable. In this, common property rights are fully assigned over land and renewable natural resources to responsible guardians, i.e. the chiefdoms, on behalf of all Zambians for customary land over all the natural resources except mining, which is dealt with through the proposed Zambia Permanent Fund. They, through their Trusts, then control market environmentalism, the chiefdoms having had the property rights to them fully assigned. They therefore internalise the negative externalities (costs) of pollution or over-harvesting, charging the necessary fees to concessionaires through an auction system. Government must therefore recognise public goods and ecosystem services as things of considerable value. Such services cannot under any circumstances be privatised, but are to be held under common property by the chiefdom trusts on behalf of the people.

2 THE ZAMBIA PERMANENT FUND

Following the example of the state of Alaska, the Zambian Government elected in 2011 should establish the Zambia Permanent Fund with legislation affirming that 75 percent of all mining royalties be paid to government as a replacement for taxes, and 25 percent paid to the Zambia Permanent Fund. Annually, dividends would be paid to the registered residents of the chiefdoms in the form of a living grant to heads of families resident in the villages, the balance - being subject to a means test - paid to those living outside of the chiefdoms. As a quid pro quo, chiefdom residents would be responsible for the protection of the renewable natural resources, following a Landsafe or similar landuse plan supervised by their Trust and their customary authority. It is critical to this exercise that the mining compradors and any corrupt politicians overseeing the mining taxes are sidelined, so that mining taxes reflect international financial reality.

All contributors should follow the basic principles of a productive dialogue: communicate their perspective, ask, comment, respond,and share information and knowledge, but do all this with a positive approach.

This is a friendly website. However, if you feel compelled to comment 'anonymously', you are strongly encouraged to state your location / adopt a unique nick name so that other commentators/readers do not confuse your comments with other individuals also commenting anonymously.

INVESTMENT OPPORTUNITIES

COPYRIGHT

DISCLAIMER

The Zambian Economist is a private website produced and maintained in my own time, and reflects solely my personal opinions. Statements published on the Zambian Economist do not represent the views or policies of employers, friends, family, past or present, or anyone I may or may not be associated with. Any view, opinion or information submitted in the comments section is the sole responsibility of the respective contributor or visitor to the site. These do not in any way represent the views of Zambian Economist nor can I be held responsible for them.